Hot money refers to funds that are quickly mobile, searching for immediate profit that travels across the border. Hence, hot money is a part of international capital. In the context of international capital flows, hot money indicates funds from one country entering into the financial markets of other countries for a short term, expecting high returns. A major feature of hot money is that they are very short term. Similarly, they are quickly moving from one market to the other according the changes in risk and opportunities. Advance in money transfer facilities have promoted the flow of hot money over the last two decades.
